Are Medical Expenses Tax Deductible? - NerdWallet (2024)

FAQs

Is it worth claiming medical expenses on taxes? ›

Normally, you should only claim the medical expenses deduction if your itemized deductions are greater than your Standard Deduction (TurboTax can also do this calculation for you). If you elect to itemize, you must use IRS Form 1040 to file your taxes and attach Schedule A.

How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 7.5% of your AGI.

Medical Expense Deduction

On Form 1040, medical and dental expenses are deducted on Schedule A, Itemized Deductions. You can deduct only the amount of your medical and dental expenses that is more than 7.5 percent of your adjusted gross income shown on Form 1040, line 38.

You should also keep a statement or itemized invoice showing: What medical care was received. Who received the care. The nature and purpose of any medical expenses.

Calculating Your Medical Expense Deduction

This threshold was originally scheduled to go up to 10% of AGI in 2019, but the 7.5% of AGI was extended to tax year 2021. The Consolidated Appropriations Act of 2021 made the 7.5% threshold permanent. You can get your deduction by taking your AGI and multiplying it by 7.5%.

You can include health insurance premiums in your medical expense calculations. However, certain premiums are not eligible for medical expense deductions. You cannot include the following premiums in your tax deductions: Life insurance policies.

This is not a huge red flag for everyone. As you get older in age, the IRS likely becomes more tolerant of medical expense deductions and, therefore, would be less likely to select you for examination based on this category alone.

If you want to deduct medical expenses, they must alleviate or prevent a physical or mental defect or illness. You can't deduct expenses that simply benefit general health, like vitamins or a vacation.

The IRS allows you to deduct expenses for many medically necessary products and services, including surgeries, prescription medications, and dental and vision care. You can't deduct medical expenses that are for general health purposes, like nutritional supplements and vitamins.

You can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI), found on line 11 of your 2023 Form 1040.

Are copays tax deductible? ›

You may deduct co-pays and other medical expenses if you have enough deductions to itemize on your Schedule A. Review the TurboTax article: What Are Itemized Tax Deductions? to find out if you have other deductions to itemize.

Some taxpayers have asked if homeowner's insurance is tax deductible. Here's the skinny: You can only deduct homeowner's insurance premiums paid on rental properties. Homeowner's insurance is never tax deductible your main home.

Many available deductions might apply to you as an older adult. Among the most advantageous for seniors include deductions for medical, dental, and long-term care costs.

The money spent on reading or prescription eyeglasses can be considered a tax-deductible medical expense. By categorizing glasses under "medical expenses" and itemizing deductions on form 104, Schedule A, you may be able to lower your tax burden.

The Internal Revenue Service (IRS) generally recommends that individuals keep records related to tax deductions for up to 7 years. Medical bills and receipts can be pivotal for tax deductions, especially for those with significant healthcare expenses.

However, because of the high Standard Deduction and the 7.5% of AGI threshold requirement, it can be difficult to benefit unless you have a lot of out-of-pocket costs. Still, it's a good idea to track those expenses throughout the year and keep copies of receipts.

Having a portion of your income allocated toward a pre-tax health benefit can save you up to 40% on income and payroll taxes for that portion. Also, pre-tax medical premiums are excluded from federal income tax, Social Security tax, Medicare tax, and typically state and local income tax.